Along with celebrating the holidays, this is the time of year when we start looking ahead, thinking about what the future (i.e. 2016) might hold. My friends at Aria asked me to sit down and write my thoughts about business predictions for 2016. Back in July, I suggested that in times of disruptive change you can’t predict the future and that therefore the businesses that will be successful are those that embrace the agility needed to deal with unpredictability.
Having said that, I see five trends in the marketplace that will play a large role in shaping the competitive landscape in 2016.
Convenience will become the product.
At some point next year Amazon will announce that they will be delivering products to your door 30 minutes before your order is received (OK, not really, although their analytics are almost that good).
It used to be that commoditized products were differentiated primarily by price. With today’s consumers, and especially the prized younger demographic, convenience often becomes more important than price. If you don’t believe that, ask Uber customers, most of whom gladly pay the premium for a ride during peak demand periods (rush hour, rainy days, etc.) for the convenience of being able to call up and pay for that ride on demand on the Uber app rather than trying to flag down a taxi.
It may not be having the best product or packaging or pricing that allows you to beat your competition in 2016, it may be having the best app. And think about it, if your customer is on your app, they’re captive – they can only by your product or service. Ease of use isn’t just a buzzword, it’s what you’re selling.
It will be increasingly difficult to engage and retain customers.
The key reason for making things easier and more convenient is that customers have short attention spans. Companies like Amazon and Netflix have recognized this, and responded in two ways. First, they’ve personalized their service through the use of Big Data analytics. I’m often amazed at how good both of these services are at ‘guessing’ which things in their inventory will interest me, based on my usage and browsing history and other demographic info. Second, they over-communicate. Amazon re-engages me every day, sometimes more than once per day.
A lot has been written on this site about the need to build ongoing relationships with your customers. Personalization is your best opportunity to build relationships and to differentiate your offering from your competitors.
Value propositions will be redefined.
ESPN recently announced that they had lost 7-million subscribers over the past two years, representing roughly a half-billion dollars in lost annual revenue. In case you were wondering, that’s unsustainable. The reason is simple; customers are disconnecting from cable at an accelerating pace.
Over-the-top (OTT) content offerings have changed the value proposition in video content delivery. The reason is simple – OTT providers unbundle services, giving customers to choose their own value proposition. Customers who want to watch the Kardashians and have no interest in sports don’t have to pay the extra $6.60/month that it costs to have ESPN in their cable bundle.
Up above I said that convenience is the product, with personalization as the key differentiator. Choice is a central part of your value proposition, and the flexibility to provide choices is an operational imperative for your business.
Choice is a key reason for the success of AirBnB. If I want to visit San Francisco, Marriott gives me roughly a half dozen choices. I’ve stayed in all of them, and they’re all nice hotels. But AirBnB gives me hundreds of choices – along with the ability to personalize my experience.
Monetization of things will become a thing.
The Internet-of-Things (IoT) is probably the most hyped technology in my lifetime (and that’s a good long time). Many companies are driving customer service, operational, and supply chain improvements using IoT. But most companies are still working in the margins when it comes to monetizing IoT. It’s too broad a topic to cover here, but there’s a great resource available here to stimulate your thinking.
There is a gold mine in the data you’re collecting from IoT devices, sensors, etc., and a green field opportunity for you to determine how to provide value to customers from that data.
Businesses that get ahead of these trends will continue to thrive.
Here’s the good news. Each of these trends presents an opportunity to your business. Businesses that are agile enough to stay in front of their competitors in these areas will see success in 2016.
Who is the next Uber or AirBnB? That’s a good question. I can’t tell you their name, but I can tell you the characteristics that will set them apart from their competitors:
One thing that is certain about the coming year is that disruption will continue to occur across many industries. Here’s hoping that 2016 brings you good fortune, and finds you ready for whatever comes your way.